In late February Facebook paid $19 billion to acquire the start-up company WhatsApp, just five years after its initial launch in 2009. WhatsApp is a full, cross-platform mobile-messaging phone service. It works by using a phone’s contacts folder as its “prebuilt social network” and now allows users from different manufacturers to exchange messages. Users login with their own phone number and real name.
WhatsApp focuses on its utility, simplicity, and quality of service. Their personal brand is to private maintain and keep a history of current relationships and chats, not hooking up with someone. Using real names allows friends to find one another. It also builds the business because of the network that is developed: the more people who join, the more likely it is that users will draw in others.
Facebook’s newly purchased company is highly successful. Typically, in excess of 18 billion messages are sent through its network, and this amount is increasing exponentially. From December 2013 to January 2014, there was an additional surge of two billion messages. Moreover, some messages go to multiple recipients, potentially doubling the amount sent. The number of active monthly users of WhatsApp totals now approximately 450 million and another million are added each month, which is what made the company so attractive to Facebook.
WhatsApp is a global company. Initially it was free and business was brisk – 10,000 downloads a day. Price containment was part of the initial design. In developing countries texting prices can be very high. The company added picture messaging, and moved to a one-time download fee. Currently, they have an annual subscription cost after the first year of use: $1.00 … or £1.00 … or €1.00. And, they offer advantages over older messaging services, such as Skype and AOL’s AIM.
The company was created by Jan Koum, 38, who came from modest beginnings. He didn’t even have a computer until he was 19, but he did have an abacus. His family didn’t have money to frequently call family back home to Ukraine, where they had emigrated from when Koum was 16. Thus, it makes sense that Koum would found an organization based on phone-based communications. And, that built into the system is privacy in the form of encryption between the client and the server. All chat histories are stored on the phone, not the server.
Both Koum and his cofounder Brian Acton, 42, worked at Yahoo! since the late 1990s before launching their own business. When Koum began WhatsApp, he set up three rules: First, there would be no advertising. This concurred with his Soviet upbringing. Second, citizens’ privacy would not be at risk. And, third, the user experience would be accessible and reliable. The three rules are set as a company mantra: No ads, no games, and no gimmicks. For this reason, privacy groups have now raised concerns about Facebook’s purchase of WhatsApp.
Before the acquisition by Facebook, Koum and Acton expressed their own concern about working in a large company and spoke about the importance of maintaining their three rules, as a promise to their users. Privacy advocates have taken this to heart: two groups recently filed a complaint with the FTC (Federal Trade Commission) to block Facebook’s purchase. They want to know how Facebook will use the data. The allegation is that the purchase may be “an unfair and deceptive trade practice” because of WhatsApp’s promise to its users that it not collect data for advertising purposes.
The charge is that Facebook will break that promise because its record indicates that it regularly integrates data from companies it acquires. Facebook CEO Mark Zuckerberg says that, following the acquisition, nothing will change for WhatsApp users and that the business will continue to operate separately. Facebook claims that its sole intent is to allow more connectivity and to deliver core Internet services more affordably and efficiently.
Facebook has questions to answer in its acquisition of WhatsApp. A lot of users may be shaking their heads at the possible discord between WhatsApp’s three promises of “no ads, no games, no gimmicks” and Facebook’s history including prior lawsuits due to their profiting from user’s information. Users may now well be asking Facebook, “WhatsApp?”
By Fern Remedi-Brown